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ETC Announces Fiscal 2025 First Quarter Results

SOUTHAMPTON, PA, USA, July 18, 2024 – Environmental Tectonics Corporation (OTC Pink: ETCC) (“ETC” or the “Company”) today reported its financial results for the thirteen week period ended May 24, 2024 (the “2025 first fiscal quarter”).

Robert L. Laurent, Jr., ETC’s Chief Executive Officer and President stated, “We are pleased with the 76% increase in ETC sales vs. prior year driven by a 116% increase in sales of Aircrew Training Solutions vs. prior year and a 91% increase in sales vs. prior year within our Sterilizer Systems business.  As a result of the strong bookings in the first quarter of fiscal 2025, ETC finished the quarter with a record backlog of approximately $114 million, which we anticipate will continue to drive increases in production, sales and profitability over the next 2-years.”

Fiscal 2025 First Quarter Results of Operations

Net Income (Loss)

Net income was $1.4 million, or $0.08 earnings per diluted share, in the 2025 first fiscal quarter, compared to net loss of $1.1 million during the 2024 first fiscal quarter, or ($0.08) loss per diluted share.  The $2.4 million increase is due primarily to the combined effect of a $5.8 million increase in net sales and a 9.6% increase in gross profit margin percentage partially offset by a $0.4 million, or 14.0% increase in operating expense and $0.3 million loss at our subsidiary, ETC-PZL. The ETC-PZL loss is attributable to a reduction in government grants and orders during 2025 first fiscal quarter as compared to 2024 first fiscal quarter.

Net Sales

Net sales in the 2025 first fiscal quarter were $13.5 million, an increase of $5.8 million, or 76.0%, compared to 2024 first fiscal quarter net sales of $7.7 million.  The increase in net sales was mainly a result of a $3.4 million, or 116.1% increase in ATS sales as well as a $2.9 million, or 91.4% increase in Sterilizer Systems sales in the 2025 first fiscal quarter as compared to 2024 first fiscal quarter.

Gross Profit

Gross profit for the 2025 first fiscal quarter was $4.5 million compared to $1.8 million in 2024 first fiscal quarter, an increase of $2.7 million, or 146.8%.  The increase in gross profit was due to higher net sales within the ATS and Sterilizer Systems business, along with a more favorable mix and increased overhead absorption resulting from higher production levels. Gross profit margin as a percentage of net sales increased to 33.6% in the 2025 first fiscal quarter compared to 23.9% in 2024 first fiscal quarter.

Operating Expenses

Operating expenses, including sales and marketing, general and administrative, and research and development, for the 2025 first fiscal quarter were $3.0 million, an increase of $0.4 million, or 14.0%, compared to $2.6 million for the 2024 first fiscal quarter.  The increase in operating expenses was due primarily to higher selling expenses, primarily a result of increased expenses related to higher net sales and overall employee related costs.

Interest Expense, Net

Interest expense, net was $0.1 million for the 2025 first fiscal quarter as compared to $0.2 million for the 2024 first fiscal quarter, a decrease of $0.1 million, or 41.4%.  The decrease in interest expense, net was primarily attributable to an increase in interest income from the proceeds received related to the 2020 and 2021 Employee Retention Credits received in 2025 first fiscal quarter.

Cash Flows from Operating, Investing, and Financing Activities

During the 2025 first fiscal quarter, cash flows provided by operating activities were $2.9 million, an increase of $8.0 million compared to cash flows used by operating activities of $5.1 million during 2024 first fiscal quarter.  Cash flows during the 2025 first fiscal quarter increased as a result of net income for quarter as compared to a net loss during the 2024 first fiscal quarter as well as a decrease in current assets slightly offset by a decrease in current liabilities in the 2025 first fiscal quarter.

Cash used for investing activities primarily relates to funds used for capital expenditures of equipment and software development.  The Company’s investing activities used $0.1 million during the 2025 first fiscal quarter compared to $0.2 million during the 2024 first fiscal quarter.

The Company’s financing activities used $3.1 million of cash during the 2025 first fiscal quarter from repayments under the Company’s credit facility compared to providing $4.3 million of cash during the 2024 first fiscal quarter from borrowings under the Company’s credit facility.

Financial Table Follows

Forward-looking Statements
This news release contains forward-looking statements, which are based on management's expectations and are subject to uncertainties and changes in circumstances. Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements, and these statements may include terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "future", "predict", "potential", "intend", or "continue", and similar expressions. We base our forward-looking statements on our current expectations and projections about future events or future financial performance. Our forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about ETC and its subsidiaries that may cause actual results to be materially different from any future results implied by these forward-looking statements. We caution you not to place undue reliance on these forward-looking statements.